“Ghost Fund” benefits privileged clients

While the Andorran authorities continue to claim from thousands of clients, documents to prove the legitimate source of funds deposited in investment funds in the defunct Banca Privada d’Andorra (BPA), due to their negligence, there are still cases that are stuck. While strangely there are accounts supported by the BPA Sicav Iberian Equities fund, that in just two months, has managed to increase more than 8%, surpassing every one of the funds that also invest in the Spanish Stock Exchange market; not to mention that in the last 12 months it has accumulated a return of 25%.

The history of the BPA Sicav Iberian Equities fund goes back to the year 2010, when BPA bought Banco Madrid and became one of the 20 largest managers of investment funds and Sicav in the country. During several years, Banco Madrid had the wind in its sails; the management did not stop to attract new clients and the investment fund was one of the best in its category.

However, the idyll was truncated between the management and the fund abruptly in March 2015, when the Treasury of the United States (FINCEN) accused the Andorran group of collaborating in money laundering. This forced the financial authority of the Principality to intervene BPA and, within a few days, the Bank of Spain chose to intervene its subsidiary Banco Madrid and its funds management.

BPA had a custodian bank in Luxembourg: KBL European Private Bankers, which also performed management work, so clients could choose between buying the Spanish Fund or its clone, the BPA Sicav Iberian Equities fund. While the future of the Andorran bank was being settled, KBL had been responsible for the day-to-day management of products: facilitate liquidity to members, receive their corresponding dividends, meet tax requirements, but cannot make decisions of the active management.

It is thus that the BPA Sicav Iberian Equities fund has been frozen during these two years in a legal limbo. Mysteriously this fund has been able to generate good returns at the start of the year without an active management. In addition, Vall Banc ensures that they do not manage the vehicle, nor does KBL in Luxembourg.

Although one-third of the accounts were blocked, it is inadmissible that a “ghost fund” will continue to generate millions, and that it has been able to generate such high returns, while thousands of clients are still struggling to recover their funds.

In contrast to the “wolves” of BPA and now Vall Banc, Banco Madrid has paid to the 15 thousand 685 creditors close to 50 percent of the amount owed in recent months. About 180 of the 400 million owed. And unlike what happened in Spain, where the freedom given to the clients of Banco Madrid led to a flight of capital which required the liquidation of the entity, the total blocking of BPA left in abeyance the situation of thousands of clients, whose assets were transferred to Vall Banc.

Two years after the intervention, the Andorran financial market has not been able to regain its credibility, as thousands of clients continue to face a number of restrictions to access their money, mainly the limitation in the withdrawal of cash.

On the judicial plane, the maximum shareholders of the entity, the brothers Higini and Ramon Cierco, as well as the CEO of BPA and Banco Madrid, Joan Pau Miquel, which has just been released after almost two years of detention, maintain their pressure on the Andorran justice.

In total, there are now eleven court cases around the BPA scandal, which include linked investigations of the Chinese mafia of Gao Ping, the Russian Petrov and the connections with the drug cartel of Sinaloa, Mexico.

The matter of fact is that 740 days later, creditors are still waiting to collect good part of its debt and Justice has still has not clarified if there was any crime involved.